[News Terms] The Fall of Argentina's 'Peronjuui'

Exhausted by severe economic hardship and high inflation, the people of Argentina have chosen political newcomer Javier Milei (53, Libertarian Party), classified as an 'eccentric far-right,' as their president. This is seen as a judgment against the left-wing populist 'Peronism' that has dominated Argentine politics until now.

Peronism refers to the populist socio-economic policies promoted by President Juan Domingo Per?n and his wife Eva Per?n during their terms in office from 1946 to 1955 and 1973 to 1974 in Argentina. Key policies included excluding foreign capital, nationalizing industries, expanding welfare, and increasing wages to boost workers' incomes. At the time, President Juan Per?n pursued state-led industrialization while reducing the role of the private sector. He nationalized railways and ports, established industrial banks, and advocated protectionism over free trade to control commerce. Meanwhile, workers' wages were significantly raised, causing real wages to increase by 25% between 1947 and 1952, leading to a sharp rise in labor costs.

Javier Milei (center right), a presidential candidate in Argentina, is waving a chainsaw during an election rally held in San Mart?n on September 25 (local time). [Image source=Yonhap News]

In the early years of his administration, these wealth redistribution policies functioned positively, with the middle class comprising 60% of the total population, earning praise for success. However, excessive government intervention in the market under the pretext of fair competition led to serious inefficiencies. Side effects such as severe fiscal deficits due to excessive government spending caused Argentina's economy to collapse rapidly, creating a vicious cycle where politics hindered economic progress. Once considered one of the world's five richest countries until the 1970s, Argentina fell into decades of severe economic recession and became one of South America's underdeveloped countries after Peronist parties took power. Some view Peronism as the origin of modern populism.

Recently, Argentina has faced its worst economic situation in 20 years. Last month, consumer prices surged 142.7% year-on-year, marking the highest annual inflation rate in 32 years. JP Morgan forecasts that Argentina's year-end inflation rate will reach 190% this year. The poverty rate continues to rise, with 4 out of 10 citizens living in poverty.

Milei, an economist outsider who was not noticed until a year before the presidential election, caused a sensation by unexpectedly winning first place in the August primary election (PASO). He has emphasized the need for regime change, stating that "government spending must be drastically reduced," even campaigning with a chainsaw in hand. He has pledged to reduce the current 18 government ministries to a maximum of 8 and to abandon the Argentine peso, the official currency, in favor of adopting the U.S. dollar.